The Business Of Horse Racing

successful stables

With five decades of producing champions behind them, Calumet Farms has certainly been a successful stable. Calumet had two Triple Crown winners in Whirlaway ('41) and Citation ('48). It also had near-misses with Tim Tam ('58) and Forward Pass ('68).

Accordingly, the stable's horses have made lots of money. Whirlaway had career earnings of more than $561,000 ($6.7 million today), while fellow Triple Crown champ Citation brought in more than a million dollars ($8.8 million today).

Meadow Stable was also successful. In 1972, their horse Riva Ridge won the Kentucky Derby and the Belmont Stakes. The stable earned a Triple Crown the following year, on the strength of Secretariat and jockey Ron Turcotte.

track finances

As the host of the annual Kentucky Derby, Churchill Downs is perhaps the world's most famous track. The Churchill Downs corporation is a publicly-traded business, sold on the NASDAQ stock exchange under the symbol CHDN.

As of late May 2004, CHDN shares went for more than $40 apiece. Through 2004, the stock peaked at $48.30, and bottomed out at $33.31, according to the money section of MSN.com.

Between 2003 and 2005, the Churchill Downs track underwent a massive $121 million modernization project. To help fund it, the track sold more than 3,000 30-year personal seat licenses (PSL), raising about $15 million. Each PSL cost between $18,000 and $75,000, and gave their owners the right to buy finish-line seats at the Derby.

jockey pay

The short, rail-thin people who try to lead the horses to victory have no set salaries. In fact, job security isn't very high, as jockeys can be cut loose just about any time. If you're successful as a jockey, however, you can make about $100,000 a year.

But for those who aren't winners, the rewards are tiny. It was estimated that jockeys who did not finish in the money at the 2005 Kentucky Derby received less than $60 each.

Following wins in the 2004 Kentucky Derby and Preakness, and just prior to the Belmont Stakes, Smarty Jones' rider Stewart Elliott landed a record-high ad deal. The telephone directory assistance company Infone gave Elliott $250,000 to wear the company's logo while riding in the Belmont.

big wager

One of the largest crowds ever to be present at the Run for the Roses was seen at the 2005 Derby, which was attended by 156,435 fans. And those horse-racing aficionados weren't just watching; they were betting.

According to a Churchill Downs news release, total betting for the 2005 Kentucky Derby totaled more than $100 million. Compare those numbers to figures from the 2004 Derby, which had total wagering of more than $99 million. That year, legal bettors collectively ponied up more than $15 billion.

pricey broadcast rights

NBC has ponied up a lot of money for the rights to broadcast major horse races. In 1999, NBC signed a five-year deal giving the peacock network the exclusive American broadcasting rights to the Triple Crown races.

In order to win these rights, NBC outbid rivals ABC and CBS. NBC's deal was worth $51.5 million. ABC, which for years had broadcast horse racing, bid $35 million. CBS put in a bid of $28 million.

final word

Horse racing is certainly a high-risk, high-reward business and owning a race horse is not cheap. If you have the next Secretariat or Smarty Jones, however, the profits will more than make up for the costs.

The sport is also high-risk, high-reward for bettors. Anyone who swings for the fences by picking long shots will walk away disappointed more often than not. But, when that 50-1 does pan out, as it did during 2005's Kentucky Derby for Giacomo, the payout can be unbelievable.

Q

uestion: What was the name of the last horse to win the Triple Crown?

A

nswer: In 1978, Affirmed won the Kentucky Derby, Preakness and Belmont Stakes.